Saturday, December 6, 2008
BANKING
Regulators Close Another Bank
First Georgia Community Bank of Jackson was closed by regulators, the 23rd U.S. bank seized this year, as mortgage delinquencies and foreclosures surge to records amid a deepening recession.
First Georgia, with $237.5 million in assets and $197.4 million in deposits, was shut by the Georgia Department of Banking and Finance. The Federal Deposit Insurance Corp. was named receiver. United Bank of Zebulon, Ga., will assume First Georgia's deposits and open the failed bank's four offices southeast of Atlanta tomorrow as United branches, the FDIC said.
United Bank will pay a premium of 0.8 percent to assume the failed bank's deposits, the FDIC said, and is buying about $60.6 million of its assets, with the FDIC retaining the rest for later disposition. The closure will cost the FDIC's deposit insurance fund, which is supported by fees on insured banks, $72 million.
MERGERS & ACQUISITIONSInvestors Back Merrill Takeover
Shareholders of both companies approved Merrill Lynch's sale to Bank of America, a move that would create the nation's largest financial services firm.
Under terms of the transaction, Bank of America would exchange 0.8595 of its common shares for each Merrill Lynch common share. Based on Bank of America's closing price of $14.34 Thursday, the deal was valued at just less than $20 billion; the plunge in value since the deal was announced, at $50 billion, reflects the devastating losses in financial-sector stocks since then.
European Union antitrust regulators on Friday also cleared the transaction.
The deal is expected to close by the end of the year, pending regulatory approvals.
RETAILBest Buy Opens Store in Mexico
Best Buy has opened its second-largest store worldwide in Mexico. The event came weeks after Best Buy cut its 2009 revenue outlook, following a sharp drop in global sales.
Best Buy has attributed slow international sales to the strong U.S. dollar and weakening local currencies abroad. But the electronics chain is faring better than its major competitor, Circuit City, which filed for Chapter 11 protection on Nov. 10.
"While these are no doubt difficult times, this is also a time for great opportunity," said Bob Willet, chief executive of Best Buy International. He said he believes Mexico is a safe bet for the future. Best Buy plans to build more stores in various cities throughout central Mexico, although it did not specify how many or when.
LEGALFedEx to Settle With Contractor
FedEx said it will pay $26.8 million to settle a case in its ongoing battle over whether its ground unit workers are illegally classified as independent contractors instead of employees.
The California Appeals Court ruled last year that about 200 contractors who operated in the state were employees. The company had long asserted that its drivers, who have the ability to own multiple delivery routes, should be classified as independent contractors. But drivers under this classification do not receive benefits and are prevented from organizing under federal labor laws.
Memphis, Tenn.-based FedEx said about 900 workers at FedEx Ground still operate in California as contractors. The company has about 13,000 drivers classified as contractors nationwide.
Lawyer Accused of ImpersonationMarc Dreier, founder of the New York law firm Dreier LLP, was released on $78,241 bail after spending three days in a Canadian jail charged with criminal impersonation.
Justice of the Peace Saverio Nestico of the Ontario Court of Justice in Toronto set the bail and released Dreier after it was paid. Dreier plans to return to the United States by tomorrow, his attorney Edward Greenspan said.
The Internet blog "Above the Law" reported Dreier's arrest Thursday.
Dreier is alleged to have pretended to be someone else at a meeting at the Toronto offices of the pension plan, in connection with a multimillion-dollar deal between Teachers' and Fortress Credit Opportunities, the Toronto Globe and Mail reported.
CONTRACTINGSallie Mae Protest Denied
SLM, the biggest U.S. student lender, was denied its protest of a government contract that allows a rival to service loans and keep millions of dollars in processing fees.
Reston-based SLM, also called Sallie Mae, filed a complaint in August with the Government Accountability Office over the Education Department's award of a no-bid contract for servicing loans to Affiliated Computer Services of Dallas.
CREDITMotorola Rating Cut to Junk
Motorola had its credit rating lowered to junk status by Standard & Poor's because its declining handset business is eating into profitability.
The rating was cut two levels to BB+, one notch below investment grade, S&P said today in a statement. On Dec. 2, Moody's Investors Service said it may downgrade Motorola's debt, currently rated Baa2, or two levels above noninvestment grade.
Co-chief executive Sanjay Jha is trying to turn around the phone business using Google's Android software to build more advanced phones. He's going up against Apple, Research In Motion and Samsung Electronics, while also facing the global economic slump. Motorola said in October it won't meet a goal of splitting off the mobile-phone unit by the third quarter of 2009.
Compiled from reports by Washington Post staff writers, the Associated Press and Bloomberg News.
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